What costs us more, benefit fraud or corporate tax avoidance?

I was surprised and pleased to see we got a link from a Benefit Fraud blog, which says of us:

This is not because I agree with everything there. But too often the blogosphere is a dialogue of the deaf, with no conversation between people of different views. It’s no good just staying in our boxes.

So thank you to them!

In this post I want to address a comment left by Eve, who said “I’m astounded how much rage people feel towards benefits cheats who make an illegal fifty quid cash in hand, or get a year’s housing benefit when they shouldn’t, yet DON’T express rage towards billionaires like Sir Philip Green who get away with avoiding £300 MILLION tax bills by being resident outside the UK (but still getting knighthoods).”

According to the DWP, intentional benefit fraud costs the UK taxpayer £1.1bn a year. It’s rather more difficult to get an accurate figure on how much business fraud and tax avoidance of the very rich costs.

Richard Murphy of Tax Research UK estimates that abolishing the domicile rule (as used by Sir Philip Green) would raise £4 billion a year. When we turn to corporations, rather than individuals, the figures get even more enormous.

A leading accountancy expert, Professor Prem Sikka, estimates that £25bn is lost to the Treasury each year through multinationals basing themselves in low-tax environments. ‘The precise figure is impossible to work out. Some say it could be as much as £80bn. We don’t know because the Treasury refuses to undertake detailed research to get accurate estimates. It is dodging the issue.’

Rupert Murdoch’s main British holding firm paid no net corporation tax in the UK throughout the Nineties. Some companies are based off shore to avoid paying tax, yet still get subsidies from the British government – “Sir Richard Branson’s Virgin Group is based in the Caribbean, yet Virgin Rail has had £500m in public subsidy over the past year.”

The Joseph Rowntree Foundation says that need, not greed, motivates most cases of benefits fraud. This certainly can’t be said of the mega rich. We could cut taxes for the average working person AND increase the level of benefits if these tax loopholes were closed, but with business interests firmly in control of our politicians this isn’t likely to happen any time soon.

As to why there’s not more rage about the issue, well, it’s not very surprising that the mainstream press doesn’t spend a lot of headlines on it when the companies who own the papers are benefiting to the tune of millions of pounds a year.